Past Exam for ECON 306 - INTERMED MICROECON THRY at Maryland (UMD)

Exam Information

Material Type:Exam
University:University of Maryland
Term:Spring 1994
  • Current Gains
  • Medical Insurance
  • Perspective
  • Natural Monopoly
  • Individuals
  • (to/for) Him/it
  • Regulations
  • Salesperson
  • Consumption
  • Substitution
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Sample Document Text

Department of Economics University of Maryland Problems: Uncertainty and Infolmation Dr. Rachel Kranton ECON 306, Spring 1994 I. The DC govemm(mt, already renowned for its vigilance in enforcing parking regulations, is considering measures to further detc:r illegal parking. Suppose that now the probability of getting caught parking illegally is p and the fine that a person must pay is F. Which of the following two plans would be more effective in reducing illegal parking: increasing the fines by 50% or by hiring enough parking enfor'~ement officers to increase the probability of getting caught by 50%. [ Assume that drivers are risk averse. 2. Jane's utility of income u(I) is given by u =..Jf. Jane is a salesperson whose income is detenllined as a percentage of her sales. In a good month, Jane's income will be $2,500, while in a bad month, Jane's income will be $900. Good lmd bad months occur with equal probability (i.e. ~,Y:t). Would Jane accept an offer from her employer which wou...

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